Bill > SB1389

This bill establishes a new tax credit, the "Small Business Health Care Premiums Contribution Tax Credit," for qualified taxpayers who contribute to their employees' health insurance costs. A qualified taxpayer is defined as an individual or entity subject to Pennsylvania tax, required to withhold federal income tax, and employing 50 or fewer people. The credit is equal to 100% of the "aggregate contribution," which is the total of the first $1,000 contributed per employee per year towards eligible health insurance costs, such as payments to an individual coverage health reimbursement arrangement or a qualified small employer health reimbursement arrangement. These arrangements are designed to help employees pay for health insurance purchased through the Pennsylvania Health Insurance Exchange Authority, referred to as the "Exchange Authority." The bill also outlines application procedures, specifies that the credit cannot be carried over, carried back, refunded, sold, or assigned by the qualified taxpayer, but allows for pass-through entities (like partnerships or S corporations) to elect to transfer the credit to their shareholders, members, or partners, with certain limitations. Importantly, the first $5,000 of these contributions are excluded from certain classes of income for tax purposes, and employers claiming the credit must make equal contributions to all employees with eligible health insurance costs to ensure nondiscrimination. The bill also includes provisions for reporting suspected fraud related to the Exchange Authority and will apply to taxable years beginning after December 31, 2026.